Reference no: EM133065778
Budgeting Systems
Question 1: Suzuki Ltd has a division that manufactures two-wheel motorcycles. Its budgeted sales for Model G in 2012 is 450 000 units. Suzuki's target ending inventory is 40 000 units and its beginning inventory is 50000 units. The company's budgeted selling price to distributors and dealers is $4000 per motorcycle.
Suziki buys all its wheels from an outside supplier. No defective wheels are accepted. The company's target ending inventory is 30 000 wheels and its beginning inventory is 25 000 wheels. The purchase price is $160 per wheel.
Required: Prepare sales budget, production budget (in units) and wheel purchase budget (in units and dollars)
Question 2: Summer furniture Ltd produces two different table sets, A and B. The company predicts a sales volume of 2000 sets for A and 2300 sets for B. The beginning inventory includes 1000 sets of A and 1200 sets of B, and the desired ending inventory will consist of 900 sets of A and 800 sets of B. To produce a set of A it requires 2 hrs in Assembly and 0.2 hr in Packing. To produce a set of B it requires 3 hrs in Assembly and 0.3 hr in Packing. The direct labour rate is $30/hr for assembly, and $10/hr for packing. Information regarding the use of direct material are provided as follows (NB. No change incurred in costs from last period to this period).
|
Direct material
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Cost/meter
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Required for A
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Required for B
|
|
Wood
|
$75
|
2 meters/set
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3 meters/set
|
|
Fibreglass
|
$42
|
1 meters/set
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2 meters/set
|
Required: Prepare the production (in no. of sets), direct material (in meters and in dollars) and direct labour (in dollars for A only) budgets.
a) Production budget (in no. of sets):
b) Direct material budget ( in meters and in dollars)
c) Direct labour budget for A (in dollars):
Question 3: Jones Ltd budgeted to produce 350 photocopy machines in March. The number of machine hours budgeted to produce one photocopy machine is 2.5 hours. Budgeted overhead was expected to be $35 000.
In March Jones Ltd produced 300 photocopy machines. The firm incurred electricity costs of $32 000.
Required:
i. Calculate the predetermined overhead rate for electricity costs based on machine
hours.
ii. Calculate the difference between actual electricity costs and budgeted electricity costs. Comment on Jones Ltd's performance in relation to electricity usage in March.
iii. Calculate the difference between actual electricity costs and budgeted electricity costs if a flexible budget is applied . Comment on Jones Ltd's performance in relation to electricity usage in March.
Question 4: The Houston Chamber Orchestra presents a series of concerts throughout the year. Budgeted fixed costs total $300,000 for the concert season; variable costs are expected to average $5 per patron. The orchestra uses flexible budgeting.
Required:
A. Construct the orchestra's flexible budget formula.
B. Prepare a flexible budget that shows the expected costs of 8,000, 8,500, and 9,000 patrons.
Question 5: Company A had $1 million sales revenues in 2011. They expect that the sales revenues in 2012 would be increased by 10%. In 2012 budgeting process, the budgeted sales revenues submitted by the sales manager are $1.09 millions. What is the budgetary slack in this case?